US Stocks Jump Into Sept With Fifth-Biggest Gain Of Year

DonnaKardos

(Updates with additional company information, beginning in the seventh paragraph.)

NEW YORK (MarketWatch) -- U.S. stocks rallied Wednesday, with Bank of America, Caterpillar and J.P. Morgan Chase leading broad gains in a strong start to September after manufacturing data topped expectations.

The Dow Jones Industrial Average advanced 254.75 points, or 2.54%, to 10269.47, marking its biggest one-day gain since July 7 and its fifth-largest one-day gain this year. All 30 of the measure's components rose, led by Bank of America, which jumped 76 cents, or 6.1%, to 13.21. Caterpillar was also strong, up 3, or 4.6%, to 68.16, and J.P. Morgan added 1.38, or 3.8%, to 37.74.

The Nasdaq Composite gained 62.81, or 2.97%, to 2176.84. The Standard & Poor's 500 index climbed 30.96, or 2.95%, to 1080.29, with all of its sectors ending the session higher. The industrial and financial sectors posted the biggest percentage increases.

The gains followed a report from the Institute for Supply Management showing the U.S. manufacturing sector unexpectedly rebounded in August, with employment rising strongly. The data came on the back of encouraging manufacturing numbers from China. The reports stood in great contrast to more downbeat numbers on the economy recently, and helped feed investors' thirst for a ray of hope following the market's worst August since 2001.

There were some weak spots in Wednesday's data. The Commerce Department reported U.S. construction spending declined in July to the lowest level in 10 years, and payroll giant Automatic Data Processing said private-sector jobs in the U.S. fell by 10,000 during August. However, investors overlooked those reports as the manufacturing data seemingly put the market into a euphoria.

"Investors were looking for optimism, and they found it," said Jack Ablin, chief investment officer at Harris Private Bank. "They shrugged off ADP, but like it or not, investors are going to come face to face with jobs data at the end of the week. I think that's going to have a much bigger impact on the future direction of the market than what we're trifling with today."

Burger King soared 2.41, or 15%, to 18.86. The Wall Street Journal reported that the fast-food company has been in talks with private-equity firms in recent weeks about a possible sale of the second-largest hamburger chain, according to people familiar with the matter.

Electronic Arts climbed 88 cents, or 5.8%, to 16.11. The videogame publisher estimated sales of its Madden NFL 11 increased 5% in August to become the top-selling videogame in North America. The company also said digital revenue for game has more than tripled from a year earlier.

Itron added 3.65, or 6.8%, to 57.65, and Cisco Systems advanced 28 cents, or 1.4%, to 20.26. The companies announced a strategic alliance where the smart-meter company and the network communications giant will work on a new communications platform for smart-grid technology.

Joy Global advanced 3.61, or 6.4%, to 60.16. The mining-equipment company's fiscal third-quarter profit fell 4.7%, but it raised its profit outlook for the year. In addition, Joy Global said the recent slowdown in demand for mined commodities from China and the U.S. and the threat of higher taxes in some commodity-rich countries aren't diminishing customers' interest in adding new equipment. Shares of rival Bucyrus International increased 4.56, or 7.9%, to 62.05.

PerkinElmer gained 1.06, or 5.1%, to 22.07. The company, which sells analytical products and services to the health-care and industrial sectors, is selling its lighting and security business, which was used in health and other settings, for $500 million to a private-equity firm.

Rowan jumped 2.31, or 9%, to 28.02. Jefferies said the oil-and-gas drilling-services and equipment company confirmed it has finalized two long-term contracts with Saudi Aramco at rates well above consensus expectations.

Seadrill climbed 1.55, or 6.7%, to 24.73. UBS and Credit Suisse lifted their target prices on the stock a day after the provider of drilling and well services posted second-quarter earnings and revenue above analysts' expectations.

Western Digital increased 1.50, or 6.2%, to 25.66. Morgan Stanley upgraded its investment rating on the data-storage company's stock to equal weight, saying the shares may not have too much further to fall. The data-storage company's stock has suffered from concerns about PC weakness, but Morgan Stanley said the current valuation already prices in further earnings cuts and "long-term value destruction." Shares of competitor Seagate Technology edged up 60 cents, or 5.9%, to 10.73.

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